Strong U.S. job growth, rising wages set stage for Fed rate hike
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. employers hired workers at a robust pace in February, beating expectations, and wages grinded higher, which could give the Federal Reserve the green light to raise interest rates next week despite slowing economic growth.
Nonfarm payrolls increased by 235,000 jobs last month as the construction sector recorded its largest gain in nearly 10 years due to unseasonably warm weather, the Labor Department said on Friday. January's employment gains were revised up to 238,000 from the previously reported 227,000.
Fed Chair Janet Yellen signaled last week that the U.S. central bank would likely hike rates at its March 14-15 policy meeting.
Job gains averaged 209,000 per month over the past three months, well above the 75,000 to 100,000 needed to keep up with growth in the working-age population.
"The report seals the deal for a rate hike next week. The labor market is where the Fed wants it to be," said Gus Faucher, deputy chief economist at PNC Financial in Pittsburgh.
Last month's brisk clip of hiring was accompanied by steady wage growth, with average hourly earnings rising 6 cents, or 0.2 percent. January's wage growth was revised up to 0.2 percent from the previous 0.1 percent gain. That lifted the year-on-year increase in wages to 2.8 percent from 2.6 percent in January.
The unemployment rate fell one-tenth of a percentage point to 4.7 percent, even as more people rushed into the labor market, encouraged by the hiring spree. Economists had forecast employment increasing by 190,000 jobs last month.
U.S. stocks rose, but gains were curbed by the prospect of higher borrowing costs. Continued...